Patent Fee Diversion and Patent Reform Whining

byStephan KinsellaonSeptember 7, 2011

As a practicing patent lawyer, I am on lots of patent lists and the like, and get regularly inundated with pro-patent propaganda. Case in point: a day or two ago I received an email blast from patent shill “Dr. Jose Melendez,” “the founder and CEO of Patent Calls, Inc., a company focused on providing technology based patent understandings that can be trusted”. The email is reproduced in his blog post, The $600M Innovation Tax, which whines that upcoming patent reform legislation1 will “divert” Patent and Trademark Office (PTO) fees to the fedgov, instead of letting the PTO “keep” the fees to “improve” patent “quality” (double-sic). Congress-critter Tom Coburn makes similar whines on NRO, calling the patent fee “diversion” a “tax on innovation.”

I then received an email sent by a fellow member of one of the patent lawyer email lists I’m on, urging all of us patent practitioners to fight the patent fee diversion. The email commended and quoted Patent Fee Diversion Is a Tax on Innovation by Senator Tom Coburn, and approvingly included the following excerpts from Coburn’s propaganda:

“Fee diversion is the practice of congressional appropriators’ diverting fees that innovators and entrepreneurs pay when applying for patents and trademarks to other government programs. Fee diversion saps the lifeblood of the American economy — innovation and invention — in order to subsidize the desire of career politicians and appropriators in Congress to avoid hard choices. Fee diversion operates like a tax on innovation, because it requires entrepreneurs to spend more money.

The Senate has already voted to end fee diversion, by a margin of 95 to 5. …………I intend to give Senate appropriators the chance to back up that claim by voting on my amendment to end fee diversion. If my amendment fails, I will do everything in my power to slow the bill and highlight this egregious tax on innovation.

If politicians in Washington want to be taken seriously in the jobs debate, ending a practice that steals from job creators would be a good first step. ……. Congress should fix the patent bill immediately and restore my language ending fee diversion. If Congress does not make this fix, President Obama should veto it. Otherwise, he will be complicit in a scheme that is rigged to rob the very people we say we want to help — America’s job creators.”

The email said in part that “Essentially everybody agrees that fee diversion, the raiding of fees paid into the patent office is a bad thing and should be ended. The Senate voted 95-5 in March to end fee diversion. But the bill that eventually passed the House ( H.R. 1249) continues to allow fee diversion. The Senate should continue to stand by its original vote to end fee diversion by supporting the Coburn amendment.”
I replied to all the lawyers on the list as follows:

It is not true that everybody agrees fee diversion is a bad thing. The money collected by the PTO is somewhat arbitrary given the monopoly power (to grant monopoly patent grants) given to it by the state, and given that the PTO is basically “owned” by fedgov. Just as a parent company may do what it likes with a subsidiary, so here. It is not clear at all that all of the “profits” of the subsidiary-PTO are necessary to fund its operations. Suppose Congress ordered it to quadruple patent filing fees tomorrow. This may well result in a huge windfall. It is not immediately obvious that all the surplus profit would need to be diverted to the PTO for spending on operations. The idea that all of the fees the PTO generates (using the state monopoly granted to it) need to be kept by it to fund operations presupposes that it will never make a profit.

The opposition to fee diversion also rests on other controversial assumptions–namely, that it is good that the PTO be well-staffed and funded; and that the PTO itself is a good thing. For someone who believes patents are harmful and a plague that should be ended (and believe me there are many companies besieged by patent assaults who think this), they might prefer the PTO to be starved of funds to hasten its demise and/or the reduction in the perception of patent quality/legitimacy.

In short I think it is inappropriate for patent attorneys to automatically urge a political stance to their fellows based solely on their status as recipients of the patent system. It is an outright political stance and ought not to be characterized as anything else; the “should” in the comments below belies this. It is not something “everyone agrees to”; and I fail to see why a list of patent practitioners is to be used to push any political stance here any more than it ought be used to favor Republicans over Democrats or vice-versa. Or, if the list is to be used for political views, I’d like to urge everyone here to consider urging their lawmakers to severely curtail the anti-property, anti-market, anti-competition patent monopoly privileges that the unjust patent system generates.

Yes, my fellow patent parasites probably hate me. I am a bit curious what it takes to be kicked off one of these lists.

I am intelligent, honest, libertarian, experienced in patent law, and have articulated my views clearly and explicitly. Of course, this means i have no credibility. The only people who have credibility are patent shills whose bread is buttered by the system they pretend to think is legitimate.

Your referring to patent rights as “property rights” is a dishonest and/or stupid exercise in question-begging.

The Center for the Study of Innovative Freedom (C4SIF) is dedicated to building public awareness of the manner in which laws and policies impede innovation, creativity, communication, learning, knowledge, emulation, and information sharing. We are for property rights, free markets, competition, commerce, cooperation, and the voluntary sharing of knowledge, and oppose laws that systematically impede or hamper innovation, especially those enforced in the name of defending “intellectual property,” such as patent and copyright; these should be radically reformed or entirely abolished.

We provide news commentary and analysis and scholarly resources from our unique pro-property, pro-market, pro-innovation perspective. The Center is the publisher of the online scholarly journal Libertarian Papers.